Hi! Welcome to StartingAPub.com. The purpose of this site is to share tips and advice about starting a pub, bar, restaurant or nightclub business with entrepreneurs who are venturing into the industry for the first time.

StartingAPub.com provides useful insights for new startups to help them maximize their chance of success by sharing tips on important issues to consider and common mistakes which are avoidable.

If you have a specific question related to opening or investing in a pub, bar or restaurant business which is not covered in the site, please post your question or comments below.

Thanks for visiting. We hope the resources in this site will help your business in some way and we’d like to wish you the best of luck with it.

Pubs and bars can be real cash cows if you know how to plan and manage the business properly. Some people will make money and others will lose, what will you be?

Unfortunately, just like the majority of small businesses, most of the pubs that open will fail within the first few years of business.

However, for the few that get the formula right, a pub business can generate a steady income over many years to come.

So, the answer would be yes, you can make money by starting a pub IF you are the minority that have the knowledge, experience and expertise to run a pub efficiently.

In order to open a money making pub, you should have a very detailed business plan, an experienced team, a suitable location and a lot of luck.

There are many things that can be planned for, and also many issues that you cannot predict. By having a good plan, you can address the common problems from your business system and let the experienced team handle ad-hoc matters that arise in the day to day operations.

Try to focus on your pub’s business plan and financial projections in as much detail as possible as it will be your road map once the business starts. Take your time to plan well and thoroughly.

A lot of pubs are started and operated by owners that do not have experience in business, in running a pub or both. This can be a recipe for disaster unless the problem is acknowledged and addressed.

Family Pubs

For example, there are pubs that are family owned and operated with the owners actually living on the premises above the pub. In these cases, if the pub is successful, the family will have found the right formula to run the business efficiently.
However, in many family-run pubs, the business is usually not as good as it could be because of the lack of business experience for marketing, cost control or various other management areas.

Another common problem is that family operated pubs sometimes stick to outdated methods that worked in the past, but are not so appealing in today’s market. Change and innovation is sadly lacking in pubs that have not evolved with the times.

Joint Ventures

Pubs started by a few friends who feel that it’s a good idea to own a bar usually fail miserably as they do not have experience in opening a pub or running a bar.

Having business experience from another industry is a head start to understanding the requirements of managing a bar but it may not be enough to fully understand the inner workings of a pub.

An Experienced Team

One of the best ways to gain direct experience in starting and running a pub effectively is to learn from someone who has years of experience in operating successful pubs. There will be many tricks of the trade that you can be taught rather than learning the hard way.

If you’re one of these inexperienced owners, try to surround yourself with good, experienced managers and staff to assist in the startup.

If your pub is based in the middle of the city where there are lots of natural potential customers, it may be perfect for sales but your rental will be very high. In fact, other costs may be higher as well.

On the other hand, if you are based out-of-town, property prices will be cheaper but you’re not going to get any ‘walk-in’ customers and you’ll have to work harder to attract patrons to your pub.

In a way, by spending more money on rental to be in a highly populated area, it could save you on advertising, marketing and other operational costs as you’re likely to get automatic customers from pedestrian traffic and natural brand awareness.

Do note though, that your competition may be greater in the city as well, so when you consider all the possibilities, it does come back to your concept and business plan to decide on what’s the most suitable choice – in the city, outside the city or somewhere in between.

A lot of it really does come down to common sense. If your concept is an all-day family pub with a garden, full kitchen and entertainment for kids, it may not be feasible to be located in the city centre.

So, before deciding on the location for your new pub or bar, try and be very clear about your vision and concept.

Any pub or bar needs to be clear about its concept, market, customers and unique offerings in order to have a well thought out business plan.

Are you looking to start a traditional pub, a modern bar or some sort of a mix between the two? Is it a family friendly pub or more of a nightclub with loud music? Will you offer food or just snacks, will there be any form of live entertainment or any special attractions?

A lot of these questions will help you define your concept before opening a pub.

Once you’ve decided on your concept, the next step is to identify a suitable location. The location is one of the most important factors in establishing a successful bar or pub. Take your time in assessing as many options as possible and do not rush into confirming any property. Remember, once you’ve chosen the location and invested money into renovating it, you’ll be stuck there, so think carefully.

If you’ve found something you like, write down a list of all the positive and negative things about the prospective property. Next, do a detailed examination of all the negative factors and where possible, identify all the costs involved in rectifying the problems.

Once you’ve got a monetary evaluation of the issues and still feel that the positives outweigh the negatives, note it as a shortlisted option.

If you do this for all the properties you’re considering for your new pub, and then compare each of the shortlisted choices against each other, you’ll get a lot of insight into all the relative benefits and setbacks.

Most of all, it will force you to really think deeper and understand more about what’s involved in your new business.

A well-run bar should have good systems for Cash Management, Inventory Management, Human Resource Management and Customer Relationship Management.

Customers: Customers can be a problem for every industry, but when it comes to pubs and bars, they are normally intoxicated and behaving irrationally. This is part of the business and it is containable with good security systems and staff.

Cash/Inventory: Bars are a cash business which is great, but is also requires careful cash management and corresponding inventory controls to prevent pilferage and theft. A well-monitored inventory and cash management system will detect most leakages but constant checks are required to minimise residual losses.

ManagementTeam: Getting the correct person to lead the team is absolutely vital. In fact, at least 2 very competent team leaders are required, one for the front-end sales and marketing and the other for back-end inventory management and cost control.

There are also issues from vendors, stakeholders and other minor problems, but the main challenges to running a bar revolves around maintaining a strong management team that delivers results.

Owning a bar may seem like an attractive proposition on the surface, but after evaluating the operational dynamics in detail, you may want to reconsider your reasons for getting into the business.

One of the main problems with a lot of such F&B startups is that they are owned and operated by people who have little experience in the business. Many of these entrepreneurs enter the industry with the perception that it is glamorous, fun and highly profitable, without fully understanding what it takes to make the venture successful.

So what does it take to operate a profitable bar?

Well, there’s an endless list of things we could discuss here, but before getting carried away in the finer details, it may be useful to reconsider the more basic question of whether bars and pubs are in fact profitable businesses.

On paper, yes, they look like they make money. However, that really depends on the assumptions in your financial projections. If you’re new to the business, it’s safe to say that some of the forecasts may not be totally accurate. To account for this, it would be prudent to stress test your model by lowering your sales projection by 25% to see if it’s still profitable. In the same way, try raising your operational costs by 25%, is it still profitable?

Naturally, the effectiveness of this simulation will depend on the accuracy of the initial/base set of projections. As a general guide, if you can raise your costs by 25%, lower your sales estimates by 25% and still show a hefty profit, it may be a signal that something’s not right in the projections.

If you’ve refined the numbers and are still convinced about the profitability, now add in the cost of you and/or your (business) partners’ time in managing the business, assuming that at least one of you will have to quit your job to actively manage the bar. Is it still profitable?

Most of the time, once all the detailed costs have been accounted for, a pub venture which appears to be profitable at the start turns out to be a money loser, especially when depreciation and amortization charges are added to fully reflect the true state of the financial accounts.

At some point in your life, it’s likely that you’ll come across someone who’s interested in opening a Bar or Pub business. Drinkers, clubbers and nightlife patrons often have the misconception that owning such establishments will be fun and profitable. Continue reading “Opening a Bar or Pub Business”